Opportunity Cost

Flashcards covering key concepts related to opportunity cost, trade-offs, and economic principles from lecture notes.

Opportunity Cost

The gain of the next best option; the benefit forgone by choosing one option over another.

Lump of Labor Fallacy

The mistaken belief that there is a fixed amount of work available, leading to the assumption that a job loss in one sector means a job loss for the entire economy.

Macroeconomic Disruption

Significant changes in the economy that can cause hardship, such as the need for retraining and relocating workers.

Nirvana Fallacy

The tendency to compare actual situations with idealized alternatives, often leading to unrealistic expectations.

Trade-offs

Alternatives that must be considered when making a decision, as every choice involves sacrificing something else.

Cost-Benefit Analysis

A systematic approach to estimating the strengths and weaknesses of alternatives.

Incentives

Factors that motivate individuals to make decisions, highlighting that if one option was the best, it would have been adopted universally.

Scarcity

The economic principle that resources are limited, requiring choices to be made.

Forgone Benefit

The positive outcome that is given up when a choice is made.

Professional Opportunity Cost

The potential gain lost when a highly skilled individual chooses one profession over another with higher remuneration.